How Group Identification Distorts Beliefs

55 Pages Posted: 3 May 2015 Last revised: 12 Jul 2019

See all articles by María Paula Cacault

María Paula Cacault

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne)

Manuel Grieder

ETH Zürich - Department of Humanities, Social and Political Sciences (GESS); Zurich University of Applied Sciences (ZHAW)

Date Written: May 21, 2019

Abstract

This paper investigates how group identification distorts people's beliefs about the ability of their peers in social groups. We find that experimentally manipulated identification with a randomly composed group leads to overconfident beliefs about fellow group members' performance on an intelligence test. This result cannot be explained by individual overconfidence, i.e., participants overconfident in their own skill believing that their group performed better because of them, as this was ruled out by experimental design. Moreover, we find that participants with stronger group identification put more weight on positive signals about their group when updating their beliefs. These in-group biases in beliefs can have important economic consequences when group membership is used to make inference about an individual's characteristics as, for instance, in hiring decisions.

Keywords: Social Identity, Overconfidence, Self-Image, Belief-Updating, Discrimination, Stereotypes

JEL Classification: C92, J71, D01, C91

Suggested Citation

Cacault, María Paula and Grieder, Manuel, How Group Identification Distorts Beliefs (May 21, 2019). Journal of Economic Behavior and Organization, Vol. 164, 2019. Available at SSRN: https://ssrn.com/abstract=2601712 or http://dx.doi.org/10.2139/ssrn.2601712

María Paula Cacault

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne) ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland

Manuel Grieder (Contact Author)

ETH Zürich - Department of Humanities, Social and Political Sciences (GESS) ( email )

Chair of Economics
Clausiusstrasse 87
Zurich, 8093
Switzerland

Zurich University of Applied Sciences (ZHAW)

Center for Energy and the Environment
School of Management and Law
Winterthur, CH 8401
Switzerland

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